I have decided to post my trades on Collective2.com. For me, this will be the most efficient way for me to display my work. For the prospective subscriber, this is the best way to to verify my trade history.

As I was re-reading The Amazing Life of Jesse Livermore: World's Greatest Stock Trader, I once again noticed the large gaps of time between some of his best trades: 1906, 1907, 1910, 1915, 1916, 1920. Then page 192 sums it up nicely:

"Livermore always considered TIME as a real essential trading element. He often times would say: 'It's not the thinkin' that makes the money-it's the sitting' and waitin' that makes me the money.'

This has been incorrectly interpreted by many people to mean Livermore would buy a stock and then sit and wait for it to move. This is not so. There were many occasion where Livermore sat and waited in cash, holding little or no stock, until the right situation appeared. It was his ability to sit and wait patiently in cash until the 'perfect situation presented itself to him.' When these conditions came together, when as many of the odds as possible were in his favor, then and only then would he strike."

At the end of 2008 the market was "scaring" people out. In 2009 it seems like the market is trying to "wear " people out! Rest assured that when the opportunity presents itself, we will buy (or sell!) only the best of the best stocks. Unfortunately now is not that time, so sit tight just as Edwin Lefevre said in the trading classic Reminiscences of a Stock Operator:

"It never was my thinking that made the big money for me. It always was my sitting."

On Tuesday the Bank and Insurance sectors were some of the worst performing sectors. On Wednesday they were some of the top performing sectors! Call this market what you will: whipsaw or choppy. I say...

The headlines read: The global banking crisis is weighing heavily on the markets. Mexican mogul could become the largest shareholder in NYTimes. General Mills and Kroger pull peanut butter items. The Nation awaits a new president.

But no matter what the headlines read, always follow the charts.

Summary: Be patient and wait for the market to come to you.Market: In a correction.Sector: SchoolsStocks: AIPC, LOPE, LZR, MYRG, DL, APPL (short)Positions: None.

In 2008, I made 12 trades in this account. Only 4 were winners. That translates into a 33% winning percentage; yet, we still made over a 100% return!

My takeaway from this review exercise:1. Be patient and wait for the proper chart setups.2. Once your entry price is triggered, take your predetermined position size.3. If you are wrong get out. (Cut losses!)4. If you are right, sit back and objectively observe the trade. (Let profits run!)5. If you are trading well, the charts tell you when to get out.

I know this is easier said than done. But do not worry, as the year progresses we will certainly have some money making opportunities. And when the trades do appear, I will walk you through them so we can make some $$$. So stay tuned!

The above chart shows a typical business cycle and the points at which various economic sectors tend to outperform the broader market. Financials and technology typically lead a new bull market. Yesterday the financial sector took it on the chin, so it could be a while before the next bull run begins: BAC -18%, C -15%.

Meanwhile, the markets tested and then rallied off their lows to end a bit higher on Thursday. Volume was higher than Wednesday. The previous November 21 low is still intact. Look for a confirmation of a possible rally in the coming days and continue to build your watch list in the next coming days.

If you are not in cash, I would certainly raise cash. Two weeks ago, the markets went up in lower volume and then last week the markets went down in increasing volume. The weakness has persisted this week. That is an ominous sign. Overnight the Nikkei was down 4.92 %, Hang Seng and Straits Times each off over 3.5%. This could get ugly.

AAPL certainly has a large question mark hanging over its head with Steve Jobs announcement.

The best way to spend your time these days is to objectively review your 2008 trades. I will post a review of my trades from 2008 this weekend. I think readers will find it very interesting.

A viewer mentioned Cramer's discussion of POT on his Monday's Mad Money program (which I do not advocate). Cramer himself will tell you he is more of a "fundamentalist" when it comes to stocks; and it showed, because his "technical" analysis of POT's double bottom did not include volume! I'm not crazy about the fertilizer sector; and as most of you already know, stocks that lead in one bull run rarely lead the next bull.

Summary: Be patient and stay on the sidelines.Market: WeakSectors: Very little leadershipStocks: Leading stocks are not acting well. Watching LOPE, LDR, HTS, AGNC, RGLDPositions: None

I sold CSKI today January 12, 2009 for a small gain. I was hoping for a big gain but the charts told me to get out so I got out. I have been asked about my approach to CSKI and here it is in a nutshell:

As the market was cratering in September and October I was short. When my shorts stopped going down, I covered them and I started creating a buy list in early November. By December, it was clear to me that CSKI was strong, relative to the rest of the market and it also had good fundamentals. It became my #1 stock and I started watching it more closely. CSKI then broke its dowtrend on 12/04 and then I made my first purchases on 12/08.

Overall, the markets are weak. Sit on the sidelines and wait for the charts to tell you what to do.

MARKET ANALYSIS: The Nasdaq, DJIA, and SP500 are barely trading above their 50 day moving averages and well below there 200 day moving averages.

SECTOR ANALYSIS: Sector leadership remains lacking. The "school" stocks: STRA, APOL, LOPE, ESI, COCO, and CECO tried to make a case for leadership yesterday. That remains to be seen.

STOCK ANALYSIS: The safest position is, therefore, to remain on the sidelines, in cash while you patiently build your watch list of strong stocks for the next market rally. I am watching APOL, TBV, LOPE, LZR, DL.

DISCLAIMER: EVERYONE MUST READ THIS. IF YOU DO NOT AGREE WITH THE FOLLOWING INFORMATION, DO NOT READ THIS BLOG!.

ALL COMMUNICATIONS AND INFORMATION ON THIS BLOG ARE FOR EDUCATIONAL PURPOSES ONLY. NOTHING CONTAINED WITHIN THIS BLOG SHOULD BE A INTERPRETED AS A RECOMMENDATION TO BUY, SELL OR HOLD A SECURITY. ALL VISITORS SHOULD ALWAYS DO FURTHER RESEARCH BEFORE MAKING ANY INVESTMENT DECISIONS. PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS. OPINIONS EXPRESSED ARE SOLEY THE OPINION OF THE WRITER AND NOT OF ANY OTHER COMPANY, ENTITY, FINANCIAL INSTITUTION, OR INDIVIDUAL, IMPLIED OR NOT IMPLIED. ANY INFORMATION SHOULD BE CONSTRUED AS OF THE PUBLICATION DATE AND ARE SUBJECT TO CHANGE WITHOUT NOTICE, AND WILL CHANGE WITHOUT NOTICE.

About Me

MISSION STATEMENT: I am starting this blog to help investors learn from the mistakes that I have made over the past 10 plus years while trading the markets. My 2008 returns were 100.8% and my three year returns were 67.6%, respectively. I mainly read charts and use IBD/CANSLIM principles; but, I also incorporate many methodologies that I have discovered while reading virtually every trading book ever published!
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DISCLAIMER:
All communications are for educational purposes only. Nothing in this blog should be interpreted as a recommendation to buy, sell or hold a security. All visitors must do their own research before making an investment decision. Past performance is not indicative of future results. The opinions expressed within this blog are solely the opinion of the writer and NOT of any other public or private company, entity, financial instituion or any individual(s) implied or not implied. Any information published is subject to change without notice.